Protecting you and your employees – understanding employment law
This is the first instalment in a series of articles which cover the key employment law issues you need to consider as a studio owner.
Understanding the basics of employment law is critical to running any type of business, large or small. Consider this article a whistle-stop tour of some key concepts that studio owners should be aware of. We cover the basic concepts, but this is not a substitute for seeking legal advice tailored to your specific business needs.
We have all had good and bad bosses in the past. You want your studio to be full of happy staff. Happy staff means happy clients and the business will reap the rewards, but keeping staff happy and engaged and ensuring that legal obligations are met is no walk in the park. There is a lot to get your head around when navigating Australian labour law and it is not for the faint-hearted.
By taking a best practice approach to employment, where you understand, meet and even exceed your legal obligations, your studio can enjoy benefits like:
improved ability to attract the best staff;
higher levels of staff performance and engagement;
improved retention of staff meaning lower turnover and hiring costs;
avoiding misunderstandings and disputes over employee entitlements;
easier implementation of workplace change; and
an improved ability to manage and grow your business.
Where do we start?
For the sake of brevity, we're going to skip past the hiring process, except to note that it's important for your business to be aware of how anti-discrimination laws may apply when selecting trainers and kick off with employment contracts.
Employment contracts outline the terms of the relationship between you, as an employer, and your employees. The basic terms usually include duration of the contract, type of employment (full-time, part-time, casual), the name of the position, duties, probationary period, remuneration including any bonuses and other benefits, different leave types, superannuation, methods of ending the contract for each party, protection of confidential information and intellectual property, post-termination restrictions (i.e., clauses that say "don't work for our competitor for a specified period of time" and/ or "don’t poach our staff/ clients if you leave and join a competitor business") and which jurisdiction (i.e. State laws) govern the contract.
Employment contracts cannot provide less than the minimum entitlements legislated by the Fair Work Act 2009 (Cth) in relation to:
Maximum weekly hours (38 hours per week);
Requests for flexible working arrangements;
Offers and requests to convert from casual to permanent employment;
Parental leave and related entitlements;
Annual leave;
Personal/carer's leave, compassionate leave and family and domestic violence leave;
Community service leave;
Long service leave;
Public holidays;
Notice of termination and redundancy pay; and
The Fair Work Information Statement (the FWIS) and Casual Employment Information Statement (the CEIS).
These minimum entitlements are known as the National Employment Standards (NES) and are accompanied by the National Minimum Wage to provide the baseline employment terms for the vast majority of Aussie employees in the private sector.
There are also statutory awards, enterprise agreements or other registered industrial agreements that may apply to your employees, in addition to the NES and their employment contract. There's a hierarchy in terms of how these different sources of terms and conditions apply together that is commonly misunderstood. A quick overview is below:
1. National Employment Standards - these NES minimum entitlements always apply and cannot be overridden unless an award, enterprise agreement or contract provides for more beneficial terms;
2. Enterprise Agreements - provide additional terms and conditions not covered by the NES and sometimes also improve on NES or modern award minimum entitlements. For example, a large company may have an enterprise agreement which provides paid study leave, different overtime penalties or hours of work;
3. Modern Awards - cover additional terms and conditions not covered by the NES (relevant to the applicable industry or vocation the award regulates) and sometimes improve upon NES entitlements. Modern awards only apply if there is no applicable enterprise agreement that overrides their terms for a relevant business. For example, there is a modern award which covers the school education industry, the types of employees covered by this award are primary and high school teachers. The Teacher Award contains, for example, minimum rates of pay, hours of work, allowances and leave provisions; and
4. Employment Contracts - the terms of an employment contract cannot undermine the NES, applicable enterprise agreement or modern award and ordinarily supplement the above.
Modern awards are industry-specific and occupation-specific instruments created by the Fair Work Commission that provide additional terms and conditions of employment, together with the NES. They stipulate, among other things, the minimum wage, hours of work, overtime pay, penalty pay, and allowances. For Pilates studios, it is often the case that your employees will be covered by the Fitness Industry Award 2020. Identifying the appropriate modern award (where more than one may apply) can be a complicated process, as can identifying the appropriate level within a modern award that applies to an employee. Both assessments may require legal advice, with over 120 modern awards in place at the time of writing.
Enterprise agreements are similar to awards in that they provide for additional terms and conditions of employment. The main difference is that they are negotiated agreements, which only cover a specific business or businesses within an industry. If an enterprise agreement has been negotiated between a business and its employees (and/or their unions), then it often replaces any award, which would otherwise have applied to regulate that relationship (though sometimes both an award and enterprise agreement can apply). Enterprise agreements cannot undermine the NES and employees must be better off overall when compared to the applicable modern award entitlements.
The minimum entitlements set out in the NES, modern awards and enterprise agreements only apply to workers who are employees. Some businesses can get into difficulty because they misclassify their workers as contractors, when they should be treated as employees. This creates problems because these employees have not been provided the minimum entitlements owed to an employee under the law. Misclassification of casual employees, who do not have the same minimum entitlements as other employees, can also commonly occur in small businesses. We'll explore these issues further in a future article.
Where do workplace policies fit into all of this?
Workplace policies are also important and will often provide further conditions that govern the relationship between you and your employees. Some common workplace policies include:
· a workplace Code of Conduct;
· workplace health and safety policy;
· bullying, harassment and anti-discrimination policy; and
· intellectual property protections and/ or confidentiality policy.
However, these policies should not typically be included in an employment contract, as this can make non-compliance by either party (including you, as the employer), a breach of contract. A breach of contract could mean you may be liable for damages.
Workplace policies, by their nature, need to be flexible so that they can be changed from time to time to meet the needs of your business. If a workplace policy was to form part of the contract of employment, then the employer would need to obtain each employee's consent to make any variation to the policy.
For these reasons, any employment contract should make it clear that employees are required to comply with workplace policies as varied from time to time, but that such workplace policies do not form part of the contract. Employees have a general obligation to comply with lawful and reasonable directions from their employer which can also be used to require them to comply with your policies.
What other issues should you be thinking about?
Generally, you are responsible for managing work, health and safety (WHS) risks of everyone who attends your premises, including your:
workers;
customers;
visitors; and
suppliers.
Specific WHS requirements vary between states and territories, but the overall idea is that you must ensure the health and safety of your workers and not put the health and safety of other people at risk.
To do this, you must:
provide a safe work environment;
provide and maintain safe machinery and structures;
provide safe ways of working;
ensure safe use, handling and storage of machinery, structures and substances;
provide and maintain adequate facilities;
provide any information, training, instruction or supervision needed for safety; and
monitor the health of workers and conditions at the workplace.
Your workers also have their own WHS obligations which include following your WHS policies.
As an employer, you must have workers' compensation insurance to cover you and your workers against financial hardship due to a work-related accident or illness. Rules vary between states and territories, so check with the relevant regulator for specific requirements. In most cases, you must provide workers’ compensation through an authorised insurer.
You may also want to seriously consider public liability insurance to protect against claims made by third parties in relation to injury or property damage arising from your studio's operations. For example, someone slipping and falling on a wet surface and sustaining an injury on your premises.
Cilla Robinson is a Partner & Amel Saeed, Lawyer, Clayton Utz
https://www.claytonutz.com/people/cilla-robinson
